Traditionally, turmoil pushes oil prices up. Especially due to USA demand for gasoline.
Interestingly, that is not happening at the moment.
The FT reports that American Shale Oil sources are providing a ready supply and calming the market.
Shale oil is a bit more expensive to extract, and OPEC suppliers have on previous occasions tried to bankrupt the industry by pushing down world prices enough to make it uneconomic.
But if the price threatens to rise, Shale Oil becomes profitable again.
"The crude price calm in the face of this turmoil owes much to events 7,000 miles away in the shale fields of North Dakota and west Texas, where drillers have left global markets awash with American oil.
“Shale has redrawn the map of world oil in a way most people don’t seem to understand,” said Daniel Yergin, vice-chair of S&P Global and a Pulitzer Prize-winning energy historian. “It has changed not only the supply-demand balance but it has changed the geopolitical balance and the psychological balance.”
FT.com
"The numbers are stark. Two decades ago the US produced about 7mn barrels a day of petroleum and consumed 21mn. Gulf countries like Saudi Arabia and Kuwait — which send oil through the Strait of Hormuz — were among the US’s most important foreign suppliers.
Now the US produces almost 20mn b/d of petroleum, roughly on par with consumption. Imports from the Gulf have plummeted, and the US became a net oil exporter for the first time in 2019. The prolific Permian Basin shale of Texas and New Mexico pumps more oil than Kuwait, Iraq or the UAE, three of Opec’s powerhouses."
Something similar happened to Britain’s energy dependency when North Sea Gas began delivering.
Interestingly, that is not happening at the moment.
The FT reports that American Shale Oil sources are providing a ready supply and calming the market.
Shale oil is a bit more expensive to extract, and OPEC suppliers have on previous occasions tried to bankrupt the industry by pushing down world prices enough to make it uneconomic.
But if the price threatens to rise, Shale Oil becomes profitable again.
"The crude price calm in the face of this turmoil owes much to events 7,000 miles away in the shale fields of North Dakota and west Texas, where drillers have left global markets awash with American oil.
“Shale has redrawn the map of world oil in a way most people don’t seem to understand,” said Daniel Yergin, vice-chair of S&P Global and a Pulitzer Prize-winning energy historian. “It has changed not only the supply-demand balance but it has changed the geopolitical balance and the psychological balance.”
FT.com
"The numbers are stark. Two decades ago the US produced about 7mn barrels a day of petroleum and consumed 21mn. Gulf countries like Saudi Arabia and Kuwait — which send oil through the Strait of Hormuz — were among the US’s most important foreign suppliers.
Now the US produces almost 20mn b/d of petroleum, roughly on par with consumption. Imports from the Gulf have plummeted, and the US became a net oil exporter for the first time in 2019. The prolific Permian Basin shale of Texas and New Mexico pumps more oil than Kuwait, Iraq or the UAE, three of Opec’s powerhouses."
Something similar happened to Britain’s energy dependency when North Sea Gas began delivering.